Health Insurance Fair deal question/example, help needed

[Conway1]

So my brother is correct if they sell the house and transfer the proceeds and don't apply for five years no tax will be payable on the value of the house.
In fact they can transfer her savings too and they won't pay any tax on that either.
So my mother having been deprived of all her assets,and they are moderate, I would say within the limits of the threshold, she will then be accepted for the scheme? Surely everybody could do that.
Regarding her income. The rational behind my brother paying the Nursing Home bill of €850 a week was that he would claim the 40% tax relief and mum would pay the difference ie approx €500 as that was all she could afford per week from her income. I doubt that she has more than €50,000 in other savings.
Does she have to have a house or property or land to qualify?
Are there any other pitfalls to consider?
Thanks for your prompt reply

 

[Conway1]

Thanks for that ! I am going to crunch some numbers!!

 

[Gordon Gekko]

The rational behind my brother paying the Nursing Home bill of €850 a week was that he would claim the 40% tax relief and mum would pay the difference ie approx €500

Is that not tax fraud?

This thread should be shut down as it seems to be a platform for the sharing of information on how to game the system.

 

[twofor1]

without this arrangement my mother couldn't afford nursing home care.

Can’t understand how this is the case, Fair Deal is available to all regardless what income, if any or what assets, if any that they have. Everyone pays 80% of their income, plus 7.5% of the value of their home (If they have one, this is capped at 3 years, and can be deferred until after death) plus 7.5% of any other assets they might have.

So far you have stated;

Your Mother’s income is a widow’s pension and a public service pension, so regardless of anything else, she is going to pay 80% of this income indefinitely as long as she is in nursing home care.

Your Mother has other moderate assets / savings, but these are below the threshold, so should be disregarded in the financial assessment.

Your Mother has a house worth £235K. Under Fair Deal she would be assessed at 7.5% of it’s value for the first three years only, so £17,625 annually or £52,875 maximum, thereafter it would be disregarded.

Even with tax relief I can’t see how it is ‘’Prudent’’ to privately fund nursing home charges, typically £50K /£70K annually for 5 years to avoid the £52K that would be assessed on the house.

From what you have posted, it appears that it would have been far more ‘’Prudent’’ for your mother to be in the nursing home under Fair Deal from the start.

Reading between the lines, to me it looks like someone wants to get the proceeds of the house now, rather than in due course when your Mother passes.

 

[Conway1]

In reply to Gordon Gecko, that's exactly why I am worried, I think that it is a very risky strategy and I am not exactly flavour of the month by raising the issue with my siblings!
Two for one I agree with you exactly the rationale that I have been trying to get my siblings to take on board.
It is tax efficient for my brother because he has the resources to do this.
And either one of them could conceivably buy the house now while prices are low!
Thanks to everybody for their opinions!

 

[browtal]

As far as I understand that if the older person has been in nursing home for 3 years when they apply for the fair deal scheme the annual 7.5% on the family home preperty no longer applies. This would change the figures computed.

I think the 7.5% charged on balance of assets, over €32,000, is very penal. Given the current interest rates payable i.e. .05% , that amount is excessive. Consideration should relate to the income on that amount. At 7.5% the lump sum would Quickly be depleted.
I understand why families might be tempted to find Ways to try to avoid this excessive payment.

The current farming and self employed, discussions on the Fair Deal scheme, leave a few conditions where the payments would not be subject to the 5 year disposal of assets. On occasion 3 years might apply.
Also some exceptions which are difficult to understand where should the older person become suddenly ill there are exceptions as to how the rules apply. It is important that this scheme does not confer unfair exceptional conditions which do not apply to everybody.